Concept explainers
Internet Investments in the 1990s The following excerpt is from an article in The New York Times in July 1999:36
Right now, the market for Web stocks is sizzling. Of the 126 initial public offerings of Internet stocks priced this year, 73 are trading above the price they closed on their first day of trading…. Still, 53 of the offerings have failed to live up to their fabulous first-day billings, and 17 [of these] are below the initial offering price.
Assume that, on the first day of trading, all stocks closed higher than their initial offering price.
a. What is a
b. Write down the associated probability distribution. (Round your answers to two decimal places.)
c. What is the probability that an Internet stock purchased during the period reported ended either below its initial offering price or above the price it closed on its first day of trading? [HinT: See Example 3.]
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